RFG CAPS OFF BIG YEAR AS SHARES SURGE 65%

RETAIL Food Group (ASX:RFG) shares gained further ground today as the company finished off a solid week with another record annual profit and an $88 million acquisition.

The shares edged 3 per cent higher to more than $6.60, bringing the Gold Coast-based franchise group's share gains over the past year to 65 per cent.

It has been a sharp turnaround for the company relationship with investors after its shares trended lower from as high as $7.64 in March last year.

The company this week posted net profit of $66.4 million for FY16, up 20.5 per cent, and building on a decade of record profits as a listed company.

Its fortunes on the share market turned in the months after it announced a major international expansion through the $180 million acquisition of the US-based Gloria Jean's Coffees at the end of 2014.

This week, the company added another major acquisition to its portfolio with an $88 million deal for Australian food service and manufacturing business Hudson Pacific Corporation.

The acquisition, expected to settle at the end of September, is forecast to add $11 million to RFG's EBITA in the current financial year.

RFG's latest full-year profit has been built on a 30 per cent increase in revenue to $274.6 million.

EBITDA surged 74.7 per cent to $103.7 million thanks in part to the Gloria Jean's acquisition.

Managing director Andre Nell (pictured) says profit growth is the result of diversification of the business as well as global expansion.

"International and coffee and allied beverage operations have not only flourished as significant earnings drivers in themselves, but represent key platforms upon which RFG will continue to enjoy success well into the future," he says.

The company generated 50 per cent of EBITDA from coffee supply to its franchisees and through wholesale channels.

RFG is targeting 20 per cent growth in net profit in the current year, with Hudson Pacific expected to contribute about 8 per cent of growth.